January 23, 2020·Deryk Makgill
I’ve been trying to wrap my head around the Bitcoin Cash developer funding announcement and the various responses to it.
It’s been difficult because I think it was not clear from the article exactly what certain things meant, but I have some thoughts on it now, in a list in no particular order of importance.
It looks like most of the details are still being decided. I don’t think this was quite clear from the post but I’m convinced now that, for what it’s worth, there is still a lot the miners need to settle amongst themselves. If there are some details you are worried about, make a rational case for them instead of asserting demands which you are in no position to enforce.
“Why wasn’t I consulted???” seems to be the general flavor of many of the posts in Telegram and Reddit. Nobody needs to consult you though, and I think this communitarian mindset is one of the problems in Bitcoin Cash right now. Miners put up the capital investment to secure the network and validate transactions. They enforce the rules, not Twitter users or Reddit accounts, and you will never build a global financial system if all the major players in the space need to go to Reddit to ask the crowd permission before they take action. So I actually saw the announcement’s fait accompli tone as a good sign, because its a step in the direction of miners asserting their exective role in Bitcoin Cash.
It’s not a tax. It’s not coercive. I was surprised to see so many people blur the distinction between a tax and a service fee, which is effectively what this is. The miners in question, if they have majority hash, have decided that they will not spend time, energy or money to mine the blocks of miners who do not want to pay extra for it. That’s their choice. There’s nothing coercive about this. They are not obligated to do business with anyone or to mine their blocks if they can’t agree to proper terms.
Does it cost extra in practice? From what I can see, the scheme is based on a decrease in the difficulty of mining, so the practical costs to miners on BCH might be somewhat negligible when all is said and done.
Miners choose. This is how Bitcoin works, and I thought more people in Bitcoin Cash understood this and its full implications. It’s is not “being forced on the chain.” It is not a “corporate takeover,” because Bitcoin was never designed to be anything but corporate long term.
I don’t agree with the statement in the AMA that developers will set the agenda. I had hoped the development agenda would be set by profit-seeking miners who give funds to developers for the specific projects miners have decided are worth investing in. I’m worried this could easily turn into a slush-fund boondoggle for developers, a sort of universal basic income for them that gives them more leeway to turn Bitcoin Cash into science project instead of the tight leash and collar with clear success metrics it should be.
I don’t agree with the statement in the AMA that most of the funds will be “general donations.” I don’t think forking over a pot of money and then saying “figure out something useful to do” is a very smart way to get useful things done. This seems to be a recipe for the kind of money grubbing and inefficiencies you see in D.C. non-profits, public works projects, and grad-school programs. Developers have the incentive to try bloat the budget as much as possible to get as much as the common fund as they can. The money should come with very clear goals, timelines and specific financial incentives. Maybe that will happen as the details are more developed.
I would rather see one of the major businesses or miners completely absorb ABC as their employees or start their own node implementation. This still feels a bit too non-profity for me, too churchy. I don’t want it to end up as some community fund that miners vote on, or as some sort of smart contract that pays out to devs. That might change as new details are hashed out so take all these concerns with a grain of salt, but I highly suspect development would be much cheaper if devs were employees than if they were drawing from a collective fund.
“…it doesn’t change the fact this plan has a giant “trust us” stuck to it currently.” I don’t understand complaints like this. It is not ‘our’ money and never will be. It is miner money. They’re free to make the choices they want with the money they’re mining. They don’t need to ask us to trust them.
Can this even be enforced? Do the miners in question have a majority hash rate to do this? I don’t know. It sounds like that will depend on the percentage of the unidentified hash on the network.
“How will the Hong Kong coorporations be held accountable to the community” is the wrong question. It is not “community” money. It is miner money being made available for a very specific purpose. I’m not convinced they need to be transparent anymore than any normal business should be transparent.
I would also be very skeptical of any proposal to appoint some kind of independent board to manage or advise on the distribution of funds. I think this only works if miners themselves set the agenda and give funding according to that agenda. When I see the ABC dev proposing that a group of “trusted commmunity members” help with the funds, I get very scared, because they will be in the position of advising on the distribution of money that is not theirs and potentially awarding themselves funds they don’t need.
One of the reasons I would be more in favor of miners employing developers directly and individually is that a pre-allocated amount of money taken from the coinbase put into a collective fund has different incentives than a flexible sum handed over directly by individuals who have feel the burden of that cost at the moment of handing the sum over. With the proposed model, miners spend the money mentally in advance of making actual decisions about that money, meaning the psychological burden and opportunity cost is lowered when it comes to actually distributing that money later. We also tend to think differently about collective pots of money than our own money, which is why nonprofits and grants are less efficient than businesses and investment.
The scheme for playing the hashrate dynamics between BTC and BCH seems clever at first glance. I’m curious whether or not it will work in practice and whether or not there will be any unintended consequences, but I think it’s an interesting play to try to increase the difficulty on BTC right around the time of the halving, and it looks like a lot of the costs will be born by the changes in difficulty.
Everybody won’t be happy. That’s okay. Profit seeking is what matters For months we’ve heard ad nauseum that if the big players in BCH don’t fund developers, they are greedy bastards. When some of us proposed that miners start employing devs directly, people called it Blockstream 2.0. Now when a new plan is proposed, people call it an evil cartel. I wish miners would listen less to the mob and just seek profit.
How is the 12.5% decided? How is timeline decided? I need to think about this one but I’m wondering whether or not this is overly-planned and requires too much coordination and information from everyone. I guess we’ll see in practice.
It looks like a temporary proposal. If it doesn’t work, then it shouldn’t be a problem to correct course. The sky is not falling. Relax. I will be the first to cry bloody murder though if a protocol change is made to perpetually fund developers or if developers end up with control of the fund.
The bottom line is Bitcoin Cash needs to grow up and get ready for the rest of the world. If you want it to be a hobby coin for you and your friends on Telegram, keep going down the same path. But many of us want to see it grow beyond that and some stronger action from corporate players in BCH is the right idea. Enough drama. Enough petty power jostling. Nobody in the real world cares or should care about all of this inside baseball. Adapt or die.
These are interesting times! No, I don’t quite agree with everything I read in that article or saw in the AMA, but I think the basic idea of miners asserting a more executive role in BCH is a good one so long as it is done in the right way. That remains to be seen.
Let’s see how it plays out in practice.
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